CIR V PASCOR REALTY & DEVT CORP et. al. or period for payment.

or period for payment. It was addressed to the Secretary of Justice

GR No. 128315, June 29, 1999 not to the taxpayer. They joint affidavit was meant to support the
criminal complaint for tax evasion; it was not meant to be a notice
Facts: The CIR authorized certain BIR officers to examine the books of tax due and a demand to private respondents for the payment
of accounts and other accounting records of Pascor Realty and thereof. The fact that the complaint was sent to the DOJ, and not to
Development Corp. (PRDC) for 1986, 1987 and 1988. The private respondent, shows that commissioner intended to file a
examination resulted in recommendation for the issuance of an criminal complaint for tax evasion, not to issue an assessment.
assessment of P7,498,434.65 and P3,015,236.35 for 1986 and
1987, respectively. The Commissioner filed a criminal complaint for An assessment is not necessary before criminal charges can be
tax evasion against PRDC, its president and treasurer before the filed. A criminal charge need not only be supported by a prima facie
DOJ. Private respondents filed immediately an urgent request for showing of failure to file a required return. The CIR had, in such tax
reconsideration on reinvestigation disputing the tax assessment evasion cases, discretion on whether to issue an assessment, or to
and tax liability. The Commissioner denied private respondents file a criminal case against the taxpayer, or to do both.
request for reconsideration/reinvestigation on the ground that no
formal assessment has been issued which the latter elevated to the
CTA on a petition for review. The Commissioners motion to dismiss COMMISSIONER v. ALGUE, INC.
on the ground of the CTAs lack of jurisdiction denied by CTA and GR No. L-28896, February 17, 1988
ordered the Commissioner to file an answer. Instead of complying 158 SCRA 9
with the order of CTA, Commissioner filed a petition with the CA
alleging grave abuse of discretion and lack of jurisdiction on the FACTS: Private respondent corporation Algue Inc. filed its income
part of CTA for considering the affidavit/report of the revenue tax returns for 1958 and 1959showing deductions, for promotional
officers and the endorsement of said report as assessment which fees paid, from their gross income, thus lowering their taxable
may be appealed to the CTA. The CA sustained the CTA decision income. The BIR assessed Algue based on such deductions
and dismissed the petition. contending that the claimed deduction is disallowed because it was
not an ordinary, reasonable and necessary expense.
Issues: (1) Whether or not the criminal complaint for tax evasion
can be construed as an assessment. (2) Whether or not an ISSUE: Should an uncommon business expense be disallowed as a
assessment is necessary before criminal charges for tax evasion proper deduction in computation of income taxes, corollary to the
may be instituted. doctrine that taxes are the lifeblood of the government?

Held: The filing of the criminal complaint with the DOJ cannot be HELD: No. Private respondent has proved that the payment of the
construed as a formal assessment. Neither the Tax Code nor the fees was necessary and reasonable in the light of the efforts
revenue regulations governing the protest assessments provide a exerted by the payees in inducing investors and prominent
specific definition or form of an assessment. businessmen to venture in an xperimental enterprise and involve
themselves in a new business requiring millions of pesos. This was
An assessment must be sent to and received by the taxpayer, and no mean feat and should be, as it was, sufficiently recompensed.
must demand payment of the taxes described therein within a It is well-settled that taxes are the lifeblood of the government
specific period. The revenue officers affidavit merely contained a and so should be collected without unnecessary hindrance On the
computation of respondents tax liability. It did not state a demand other hand, such collection should be made in accordance with law

1
as any arbitrariness will negate the very reason for government simply required that the assessments contain a computation of
itself. It is therefore necessary to reconcile the apparently taxliabilities, the amount the taxpayer was to pay and a demand
conflicting interests of the authorities and the taxpayers so that the for payment within a prescribed period.From all the foregoing
real purpose of taxation, which is the promotion of the common discussions, We can now conclude that [BPI] was indeed aware of
good, may be achieved. the nature and basisof the assessments, and was given all the
But even as we concede the inevitability and indispensability of opportunity to contest the same but ignored it despite the
taxation, it is a requirement in all democratic regimes that it be noticeconspicuously written on the assessments which states that
exercised reasonably and in accordance with the prescribed "this ASSESSMENT becomes final andunappealable if not protested
procedure. If it is not, then the taxpayer has a right to complain and within 30 days after receipt." Counsel resorted to dilatory tactics
the courts will then come to his succor. For all the awesome power anddangerously played with time.
of the tax collector, he may still be stopped in his tracks if the
taxpayer can demonstrate, as it has here, that the law has not
been observed.
Commissioner of Internal Revenue vs Metro Star Superama,
Inc.

CIR v. BPI In January 2001, a revenue officer was authorized to examine the
G.R. No. 134062, April 17, 2007521 SCRA 373 books of accounts of Metro Star Superama, Inc. In April 2002, after
FACTS: the audit review, the revenue district officer issued a formal
Sometime in 1988 the CIR sent two notices of assessment to the assessment notice against Metro Star advising the latter that it is
respondent of their deficiency percentageand documentary stamp liable to pay P292,874.16 in deficiency taxes. Metro Star assailed
taxes for the year 1986 in the total amount of P129,488,656.63.In the issuance of the formal assessment notice as it averred that due
response, respondent alleged that they were not properly informed process was not observed when it was not issued a pre-assessment
of the deficiency in tax assessmentmade against them by the CIR notice. Nevertheless, the Commissioner of Internal Revenue
which violated the rule set forth in NIRC. Whereas in the said law authorized the issuance of a Warrant of Distraint and/or Levy
the taxpayershall be informed in writing of the law and the facts on against the properties of Metro Star.
which the assessment is made otherwise, theassessment shall be
void. Metro Star then appealed to the Court of Tax Appeals (CTA Case No.
ISSUE: 7169). The CTA ruled in favor of Metro Star.
Whether or not respondent was properly informed of the
assessment made by the CIR? ISSUE: Whether or not due process was observed in the issuance of
HELD: the formal assessment notice against Metro Star.
Accordingly, when the assessments were made pursuant to the
former Section 270, the only requirement wasfor the CIR to "notify" HELD: No. It is true that there is a presumption that the tax
or inform the taxpayer of his "findings." Nothing in the old law assessment was duly issued. However, this presumption is
required a writtenstatement to the taxpayer of the law and facts on disregarded if the taxpayer denies ever having received a tax
which the assessments were based. The Court cannot readinto the assessment from the Bureau of Internal Revenue. In such cases, it
law what obviously was not intended by Congress. That would be is incumbent upon the BIR to prove by competent evidence that
judicial legislation, nothing less.Jurisprudence, on the other hand, such notice was indeed received by the addressee-taxpayer. The

2
onus probandi was shifted to the BIR to prove by contrary evidence
that the Metro Star received the assessment in the due course of HELD: No. Because taxes are the lifeblood of the nation, the Court
mail. In the case at bar, the CIR merely alleged that Metro Star has always applied the doctrine of strict in interpretation in
received the pre-assessment notice in January 2002. The CIR could construing tax exemptions. Furthermore, a claim of statutory
have simply presented the registry receipt or the certification from exemption from taxation should be manifest and unmistakable from
the postmaster that it mailed the pre-assessment notice, but failed. the language of the law on which it is based. Thus, the claimed
Neither did it offer any explanation on why it failed to comply with exemption "must expressly be granted in a statute stated in a
the requirement of service of the pre-assessment notice. The language too clear to be mistaken."
Supreme Court emphasized that the sending of a pre-assessment
notice is part of the due process requirement in the issuance of a
deficiency tax assessment, the absence of which renders nugatory
any assessment made by the tax authorities. MARCOS II vs. CA
273 SCRA 47
Taxes are the lifeblood of the government and so should be GR No. 120880, June 5, 1997
collected without unnecessary hindrance. But even so, it is a
requirement in all democratic regimes that it be exercised "The approval of the court sitting in probate is not a mandatory
reasonably and in accordance with the prescribed procedure. requirement in the collection of estate taxes."
"In case of failure to file a return, the tax may be assessed at
CIR v. YMCA anytime within 10 years after the omission."
GR No. 124043, October 14, 1998
298 SCRA 83 FACTS: Bongbong Marcos sought for the reversal of the ruling of the
Court of Appeals to grant CIR's petition to levy the properties of the
FACTS: Private Respondent YMCA--a non-stock, non-profit late Pres. Marcos to cover the payment of his tax delinquencies
institution, which conducts various programs beneficial to the during the period of his exile in the US. The Marcos family was
public pursuant to its religious, educational and charitable assessed by the BIR after it failed to file estate tax returns.
objectives--leases out a portion of its premises to small shop However the assessment were not protested administratively by
owners, like restaurants and canteen operators, deriving Mrs. Marcos and the heirs of the late president so that they became
substantial income for such. Seeing this, the Commissioner of final and unappealable after the period for filing of opposition has
Internal Revenue (CIR) issued an assessment to private respondent prescribed. Marcos contends that the properties could not be levied
for deficiency income tax, deficiency expanded withholding taxes to cover the tax dues because they are still pending probate with
on rentals and professional fees and deficiency withholding tax on the court, and settlement of tax deficiencies could not be had,
wages. YMCA opposed arguing that its rental income is not subject unless there is an order by the probate court or until the probate
to tax, mainly because of the provisions of Section 27 of NIRC which proceedings are terminated.
provides that civic league or organizations not organized for profit Petitioner also pointed out that applying Memorandum Circular
but operate exclusively for promotion of social welfare and those No. 38-68, the BIR's Notices of Levy on the Marcos properties were
organized exclusively for pleasure, recreation and other non- issued beyond the allowed period, and are therefore null and void.
profitble businesses shall not be taxed.
ISSUE: Are the contentions of Bongbong Marcos correct?
ISSUE: Is the contention of YMCA tenable?

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HELD: No. The deficiency income tax assessments and estate tax Facts: CTA decision ordered the petitioner CIR to refund to the Cebu
assessment are already final and unappealable -and-the Portland Cement Company, respondent, P 359,408.98 representing
subsequent levy of real properties is a tax remedy resorted to by overpayments of ad valorem taxes on cement sold by it. Execution
the government, sanctioned by Section 213 and 218 of the National of judgement was opposed by the petitioner citing that private
Internal Revenue Code. This summary tax remedy is distinct and respondent had an outstanding sales tax liability to which the
separate from the other tax remedies (such as Judicial Civil actions judgment debt had already been credited. In fact, there was still a
and Criminal actions), and is not affected or precluded by the P4 M plus balance they owed. The Court of Tax Appeals, in holding
pendency of any other tax remedies instituted by the government. that the alleged sales tax liability of the private respondent was still
The approval of the court, sitting in probate, or as a settlement being questioned and therefore could not be set-off against the
tribunal over the deceased's estate is not a mandatory requirement refund, granted private respondent's motion. The private
in the collection of estate taxes. On the contrary, under Section 87 respondent questioned the assessed tax based on Article 186 of
of the NIRC, it is the probate or settlement court which is bidden the Tax Code, contending that cement was adjudged a mineral and
not to authorize the executor or judicial administrator of the not a manufactured product; and thusly they were not liable for
decedent's estate to deliver any distributive share to any party their alleged tax deficiency. Thereby, petitioner filed this petition for
interested in the estate, unless it is shown a Certification by the review.
Commissioner of Internal Revenue that the estate taxes have been
paid. This provision disproves the petitioner's contention that it is Issue: Whether or not assessment of taxes can be enforced even if
the probate court which approves the assessment and collection of there is a case contesting it.
the estate tax.
On the issue of prescription, the omission to file an estate tax Held: The argument that the assessment cannot as yet be enforced
return, and the subsequent failure to contest or appeal the because it is still being contested loses sight of the urgency of the
assessment made by the BIR is fatal to the petitioner's cause, as need to collect taxes as "the lifeblood of the government." If the
under Sec.223 of the NIRC, in case of failure to file a return, the tax payment of taxes could be postponed by simply questioning their
may be assessed at anytime within 10 years after the omission, validity, the machinery of the state would grind to a halt and all
and any tax so assessed may be collected by levy upon real government functions would be paralyzed. That is the reason why,
property within 3 years (now 5 years) following the assessment of save for the exception in RA 1125 , the Tax Code provides that
the tax. Since the estate tax assessment had become final and injunction is not available to restrain collection of tax. Thereby, we
unappealable by the petitioner's default as regards protesting the hold that the respondent Court of Tax Appeals erred in its order.
validity of the said assessment, there is no reason why the BIR
cannot continue with the collection of the said tax.
PHIL. GUARANTY CO., INC. v. CIR
GR No. L-22074, April 30, 1965
13 SCRA 775

Commissioner of Internal Revenue vs. Cebu Portland FACTS: The petitioner Philippine Guaranty Co., Inc., a domestic
Cement Co. insurance company, entered into reinsurance contracts with foreign
G.R. No. L-29059, 15 December 1987 insurance companies not doing business in the country, thereby
ceding to foreign reinsurers a portion of the premiums on insurance
it has originally underwritten in the Philippines. The premiums paid

4
by such companies were excluded by the petitioner from its gross
income when it file its income tax returns for 1953 and 1954. PHIL. BANK OF COMMUNICATIONS v. CIR
Furthermore, it did not withhold or pay tax on them. Consequently, GR No. 112024, January 28, 1999
the CIR assessed against the petitioner withholding taxes on the 302 SCRA 250
ceded reinsurance premiums to which the latter protested the
assessment on the ground that the premiums are not subject to tax FACTS: Petitioner PBCom filed its first and second quarter income
for the premiums did not constitute income from sources within the tax returns, reported profits, and paid income taxes amounting to
Philippines because the foreign reinsurers did not engage in P5.2M in 1985. However, at the end of the year PBCom suffered
business in the Philippines, and CIR's previous rulings did not losses so that when it filed cits Annual Income Tax Returns for the
require insurance companies to withhold income tax due from year-ended December 31, 1986, the petitioner likewise reported a
foreign companies. net loss of P14.1 M, and thus declared no tax payable for the year.
In 1988, the bank requested from CIR for a tax credit and tax
ISSUE: Are insurance companies not required to withhold tax on refunds representing overpayment of taxes. Pending investigation
reinsurance premiums ceded to foreign insurance companies, of the respondent CIR, petitioner instituted a Petition for Review
which deprives the government from collecting the tax due from before the Court of Tax Appeals (CTA). CTA denied its petition for
them? tax credit and refund for failing to file within the prescriptive period
to which the petitioner belies arguing the Revenue Circular No.7-85
HELD: No. The power to tax is an attribute of sovereignty. It is a issued by the CIR itself states that claim for overpaid taxes are not
power emanating from necessity. It is a necessary burden to covered by the two-year prescriptive period mandated under the
preserve the State's sovereignty and a means to give the citizenry Tax Code.
an army to resist an aggression, a navy to defend its shores from
invasion, a corps of civil servants to serve, public improvement ISSUE: Is the contention of the petitioner correct? Is the revenue
designed for the enjoyment of the citizenry and those which come circular a valid exemption to the NIRC?
within the State's territory, and facilities and protection which a
government is supposed to provide. Considering that the HELD: No. The relaxation of revenue regulations by RMC 7-85 is not
reinsurance premiums in question warranted as it disregards the two-year prescriptive period set by
were afforded protection by the government and the recipient law.
foreign reinsurers exercised rights and privileges guaranteed by our Basic is the principle that "taxes are the lifeblood of the nation."
laws, such reinsurance premiums and reinsurers should share the The primary purpose is to generate funds for the State to finance
burden of maintaining the state. the needs of the citizenry and to advance the common weal. Due
The petitioner's defense of reliance of good faith on rulings of the process of law under the Constitution does not require judicial
CIR requiring no withholding of tax due on reinsurance premiums proceedings in tax cases. This must necessarily be so because it is
may free the taxpayer from the payment of surcharges or penalties upon taxation that the government chiefly relies to obtain the
imposed for failure to pay the corresponding withholding tax, but it means to carry on its operations and it is of utmost importance that
certainly would not exculpate it from liability to pay such the modes adopted to enforce the collection of taxes levied should
withholding tax. The Government is not estopped from collecting be summary and interfered with as little as possible.
taxes by the mistakes or errors of its agents. From the same perspective, claims for refund or tax credit should
be exercised within the time fixed by law because the BIR being an

5
administrative body enforced to collect taxes, its functions should
not be unduly delayed or hampered by incidental matters.

REYES v. ALMANZOR
DAVAO GULF LUMBER CORP v. CIR GR Nos. L-49839-46, April 26, 1991
GR No. 117359, July 23, 1998 196 SCRA 322
293 SCRA 77
FACTS: Petitioners JBL Reyes et al. owned a parcel of land in Tondo
FACTS: Republic Act No. 1435 entitles miners and forest which are leased and occupied as dwelling units by tenants who
concessioners to the refund of 25% of the specific taxes paid by the were paying monthly rentals of not exceeding P300. Sometimes in
oil companies, which were eventually passed on to the user--the 1971 the Rental Freezing Law was passed prohibiting for one year
petitioner in this case--in the purchase price of the oil products. from its effectivity, an increase in monthly rentals of dwelling units
Petitioner filed before respondent Commissioner of Internal where rentals do not exceed three hundred pesos (P300.00), so
Revenue (CIR) a claim for refund in the amount representing 25% that the Reyeses were precluded from raising the rents and from
of the specific taxes actually paid on the above-mentioned fuels ejecting the tenants. In 1973, respondent City Assessor of Manila
and oils that were used by petitioner in its operations. However re-classified and reassessed the value of the subject properties
petitioner asserts that equity and justice demands that the refund based on the schedule of market values, which entailed an increase
should be based on the increased rates of specific taxes which it in the corresponding tax rates prompting petitioners to file a
actually paid, as prescribed in Sections 153 and 156 of the NIRC. Memorandum of Disagreement averring that the reassessments
Public respondent, on the other hand, contends that it should be made were "excessive, unwarranted, inequitable, confiscatory and
based on specific taxes deemed paid under Sections 1 and 2 of RA unconstitutional" considering that the taxes imposed upon them
1435. greatly exceeded the annual income derived from their properties.
They argued that the income approach should have been used in
ISSUE: Should the petitioner be entitled under Republic Act No. determining the land values instead of the comparable sales
1435 to the refund of 25% of the amount of specific taxes it approach which the City Assessor adopted.
actually paid on various refined and manufactured mineral oils and
other oil products, and not on the taxes deemed paid and passed ISSUE: Is the approach on tax assessment used by the City
on to them, as end-users, by the oil companies? Assessor reasonable?

HELD: No. According to an eminent authority on taxation, "there is HELD: No. The taxing power has the authority to make a reasonable
no tax exemption solely on the ground of equity." Thus, the tax and natural classification for purposes of taxation but the
refund should be based on the taxes deemed paid. Because taxes government's act must not be prompted by a spirit of hostility, or at
are the lifeblood of the nation, statutes that allow exemptions are the very least discrimination that finds no support in reason. It
construed strictly against the grantee and liberally in favor of the suffices then that the laws operate equally and uniformly on all
government. Otherwise stated, any exemption from the payment of persons under similar circumstances or that all persons must be
a tax must be clearly stated in the language of the law; it cannot be treated in the same manner, the conditions not being different both
merely implied therefrom. in the privileges conferred and the liabilities imposed.

6
 Consequently, it stands to reason that petitioners who are Held: Yes. Petition dismissed.
burdened by the government by its Rental Freezing Laws (then R.A.
No. 6359 and P.D. 20) under the principle of social justice should Ratio:
not now be penalized by the same government by the imposition of The DST is levied on the exercise by persons of certain privileges
excessive taxes petitioners can ill afford and eventually result in the conferred by law for the creation, revision, or termination of specific
forfeiture of their properties. legal relationships through the execution of specific instruments.
The DST is an excise upon the privilege, opportunity, or facility
offered at exchanges for the transaction of the business. In
particular, the DST under Section 185 of the 1997 Tax Code is
Philippine Health Care Providers v CIR G.R. No. 167330 imposed on the privilege of making or renewing any policy of
September 18, 2009 insurance (except life, marine, inland and fire insurance), bond or
J. Corona obligation in the nature of indemnity for loss, damage, or liability.
Petitioner's health care agreement is primarily a contract of
Facts: indemnity. And in the recent case of Blue Cross Healthcare, Inc. v.
The petitioner, a prepaid health-care organization offering benefits Olivares, this Court ruled that a health care agreement is in the
to its members. The CIR found that the organization had a nature of a non-life insurance policy.
deficiency in the payment of the DST under Section 185 of the Its health care agreement is not a contract for the provision of
1997 Tax Code which stipulated its implementation: medical services. Petitioner does not actually provide medical or
On all policies of insurance or bonds or obligations of the nature of hospital services but merely arranges for the same
indemnity for loss, damage, or liability made or renewed by any It is also incorrect to say that the health care agreement is not
person, association or company or corporation transacting the based on loss or damage because, under the said agreement,
business of accident, fidelity, employer's liability, plate, glass, petitioner assumes the liability and indemnifies its member for
steam boiler, burglar, elevator, automatic sprinkler, or other branch hospital, medical and related expenses (such as professional fees
of insurance (except life, marine, inland, and fire insurance) of physicians). The term "loss or damage" is broad enough to cover
The CIR sent a demand for the payment of deficiency taxes, the monetary expense or liability a member will incur in case of
including surcharges and interest, for 1996-1997 in the total illness or injury.
amount of P224,702,641.18. Philamcare Health Systems, Inc. v. CA.- The health care agreement
The petitioner protested to the CIR, but it didnt act on the appeal. was in the nature of non-life insurance, which is primarily a contract
Hence, the company had to go to the CTA. The latter declared of indemnity.
judgment against them and reduced the taxes. It ordered them to Similarly, the insurable interest of every member of petitioner's
pay 22 million pesos for deficiency VAT for 1997 and 31 million health care program in obtaining the health care agreement is his
deficiency VAT for 1996. own health. Under the agreement, petitioner is bound to indemnify
CA denied the companys appeal an d increased taxes to 55 and 68 any member who incurs hospital, medical or any other expense
million for 1996 to 1997. arising from sickness, injury or other stipulated contingency to the
extent agreed upon under the contract.
Issues: WON a health care agreement in the nature of an insurance
contract and therefore subject to the documentary stamp tax (DST)
imposed under Section 185 of Republic Act 8424 (Tax Code of 1997)

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